How to minimize maintenance fee shocks when shopping for a condo


Published January 6, 2022 at 12:06 pm

TORONTO — There’s no avoiding maintenance fees if you buy a condo, but there are ways to reduce the risk of nasty surprises down the road.

Taking a closer look at potential building expenses is important these days, says Jamie Herle, president of the Canadian Condominium Institute, as costs rise for everything from insurance to energy to labour and materials.

“Especially with the economy as it is right now, and the world as it is right now, all these input costs, if you have any repairs or anything that has to happen, they’re going to be a lot more than they were budgeted for a year ago.”

Given the potentially higher repair costs, it’s important to understand the health of the building, both by walking around and looking for potential issues like water damage, and by poring through condo documents like the status certificate and condo board meeting minutes.

“You have to actually go through and do your due diligence,” she said.

Along with a mortgage and property taxes, condo owners must pay a separate monthly fee that covers the costs of the building’s operation, which generally include immediate expenses like security, cleaning and some utilities, as well as contributions to a reserve fund for bigger repair jobs down the road.

The actual monthly rate varies widely depending on the level of services such as landscaping and amenities, as well as location. Toronto, which generally has higher fees than elsewhere in the country, has an average cost of 64 cents per sq. ft. according to, which works out to $512 a month for an 800 sq. ft. condo.

The status certificate, as it’s known in Ontario, should say exactly what the fees cover, and also contain a wealth of other financial information including the latest budget and a reserve study that looks at expected costs for the next thirty years.

In Ontario and B.C. the reserve fund study (known as a depreciation report in B.C.) has to be updated every three years, but in some provinces it’s five years, so it’s important to know how old the cost estimates are given current inflationary pressures, said Herle.

When shopping for a condo it’s also important to understand you’ll be paying for all the amenities a building offers, so understand what you actually need.

“Going into a condo, do not buy a condo with a swimming pool or a concierge if you don’t expect to use them … those are expensive, big ticket items,” said Herle.

Sarah Morrey, an associate at Lash Condo Law, said that while it’s a good idea to get a professional to take a closer look at condo documents, any potential buyer should take a close look at them as well.

Along with the budget and reserve fund, condo boards are required to disclose in the status certificate any circumstances that may result in condo expenses going up, such as higher utilities or reserve fund contributions.

The report can also show the track record for a building to give a sense of potential future issues, said Morrey.

“Take a look and see if there’s any unanticipated repairs in an older building, take a look and see if there’s been any previous special assessments, or previous increases. This is all required to be disclosed in a status certificate.”

To know if the condo board has been managing funds well, she suggests taking a look at budget audits.

When shopping for a new condo, it’s also important to know that developers provide only an estimate of fees, and that they generally go up once the board takes over.

Morrey said this can happen when condo boards increase services, such as going from 12 hours of security to 24 hours, while some developers don’t charge for the first year, leading to increased fees later.

An Ontario Auditor General report from 2020 found that developers often understated fees, which rose in the first two years anywhere from 10 per cent to over 30 per cent.

Buyers should also check what the insurance situation is for the condo, as many especially in Western Canada have seen rates spike in recent years.

B.C. insurers raised rates by an average of 40 per cent from 2019 to 2020 after several years of rising claims, leading to higher fees for condo owners, while deductibles also rose significantly to leave condos potentially on the hook for more repair costs.

Justin Glasser, a realtor at Macdonald Realty in Surrey, B.C., said that he saw insurers raise deductibles from $10,000 or $20,000 to $100,000 or even $250,000.

He said that given what’s gone on with insurance costs, banks are taking a closer look at potential maintenance issues at condos and might deny financing if they see risks or don’t like what they see in condo board meeting minutes.

Listings that note buyers need 20 per cent down or that high-ratio financing can’t be done could point to maintenance issues, he said.

Glasser said condos that linger on the market also could point to issues and require a careful look, but that given the hot market and limited supply, many buyers are also just accepting potential costs down the road.

“They’re buying what’s available to them at that particular point in time, which just means they’re understanding that ‘OK this building may need some repairs in the future, and I may be buying a home that has considerably higher strata fees as well.’”

Glasser said he generally checks with brokers and bankers he knows to see if a property has been flagged by insurers.

But even still, buyers have to be aware that not all problems can be found ahead of time, he said, and that even with due diligence buyers can still face steep fees.

“We had a complex in Surrey where the complex said ‘nope there’s not a problem, nope there’s not a problem,’ and all of a sudden there was an $8 million problem.”

This report by The Canadian Press was first published Jan. 6, 2022.

Ian Bickis, The Canadian Press

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